For individuals looking to expose misconduct within their organisation, they embark on a dangerous journey. Whistleblowers risk reputational damage, bullying and the loss of their job, along with the stress and financial hardship flowing from their decision to blow the whistle. Whistleblowers have helped uncover Commonwealth Bank’s financial planning scandal, and 7-Eleven’s underpayment of workers, yet existing statutory protections for whistleblowers are deficient at best. The proposed Treasury Laws Amendment (Whistleblowers) Bill 2017 (Cth) seeks to address these deficiencies within Australia’s corporate and financial sector. These amendments require businesses to update or implement whistleblower policies, and seek to provide more protection for whistleblowers.
Whistleblower protections intend to protect those who seek to expose serious misconduct or illegal activity that has occurred within their organisation, but current laws only cover these activities when they also breach the Corporations legislation (being the Corporations Act, the ASIC Act and other related court rules). Protections for corporate whistleblowers have formed part of the Corporations Act since 2014, but have not been widely used. Existing protections appear to be largely theoretical, and have made little impact on the public and private sectors.
For those who wish to expose tax misconduct, there are no existing specific statutory protections to protect people who make disclosures from reprisals or other ramifications. Within organisations, there is currently no requirement to have or implement internal systems to deal with whistleblower disclosures. Research from Griffith University found almost one in four organisations surveyed last year neglected to consistently record concerns and provide support for issues regarding staff and whistleblowing.
The proposed amendments provide that to be a protected disclosure, the disclosure must be regarding information that the discloser has reasonable grounds to suspect indicates misconduct, or an improper state of affairs or circumstances. The proposed amendments also intend to clearly demonstrate that disclosures about all forms of serious wrongdoing in a Commonwealth legal context are covered. This is achieved by including express references to criminal and civil breaches of various financial system laws, and offences against any other Commonwealth law with a penalty of 12 months’ imprisonment or more as disclosable conduct.
The Bill also includes conduct that represents a danger to the public or the financial system as disclosable conduct. This intends to broadly cover conduct that is not an obvious contravention of the law, but is a significant risk to public safety or confidence in the financial system. For example, a failure to comply with reporting obligations under the Anti-Money Laundering and Counter-Terrorism Financing Act could fall under this limb. The Minister also has the power to prescribe other conduct as disclosable conduct in regulations. However, conduct such as workplace bullying would not be covered by the existing legislation or the proposed amendments.
The Bill broadens the meaning of what constitutes an ‘eligible’ whistleblower to include employees, officers, contractors, and suppliers, as well as former employees and contractors. Additionally, the definition covers spouses, children and dependants of any of the aforementioned individuals. Widening this definition would also incorporate ‘trustees, custodians and investment managers’ in cases regarding superannuation funds.
The amendments require public companies and large proprietary companies to have a whistleblower policy and make that policy available to people who may be eligible whistleblowers in relation to the company. Companies may need to make these policies available to former employees, former officers, contractors, suppliers and spouses, children and dependents of the aforementioned in accordance with the broader definition of ‘eligible whistleblower’. Whistleblower policies will need to include information about protections that may be available to whistleblowers, and how the company will ensure fair treatment of employees of the company who are mentioned in disclosures that qualify for protection.
Currently, whistleblowers are required to make a disclosure ‘in good faith’ in order to qualify for protection. This creates uncertainty for the whistleblower, as companies may allege that the whistleblower has a subjective or collateral motivation in order to deny the whistleblower protection. To address this, a whistleblower must now have reasonable grounds to suspect that misconduct exists in relation to the whistleblower regulated entity, or that disclosable conduct may have been engaged in by the entity.
Where a whistleblower has made a disclosure to ASIC, APRA and/or the AFP about a situation the whistleblower reasonably believes presents an imminent risk of serious harm, and the agency has not acted to address the risk, the whistleblower is protected if they then disclose the information to a member of parliament (state, territory or Commonwealth), or a journalist. It does, however, limit protected disclosures to a journalist to people working in a professional capacity as a journalist. This means that public disclosures on social media or self-defined journalists are not protected.
The amendments remove the requirement for the discloser to provide their name when making a protected disclosure, allowing for anonymous disclosures. Disclosure of a whistleblower’s identity would be a civil penalty offence. The Bill also makes it easier for whistleblowers to receive compensation where they have been victimised by introducing a reverse onus of proof. Where a whistleblower seeks compensation, and can prove that they have suffered damage because of another person’s conduct, the other person bears the onus of providing that a reason for that conduct was not a belief or suspicion that the whistleblower made, may have made or proposes to make a protected disclosure.
Submissions regarding the released draft legislation and the explanatory materials closed on November 3. The Government’s recently formed Expert Advisory Panel is also currently considering the draft legislation. The Government intends to consider the Expert Panel’s advice, along with submissions regarding the draft legislation, before finalising the legislation for introduction into parliament before the end of 2017.
Nicola Martin is a Lawyer at Justitia. To view Nicola’s profile, click here.